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Federal Circuit requires more evidence before invalidating as ineligible

In Berkheimer v. HP Inc., the US Court of Appeals for the Federal Circuit affirmed in part and vacated in part a district court's grant of summary judgment of patent ineligibility under 35 U.S.C. § 1011. The Federal Circuit made clear that patent ineligibility under Section 101 is, like indefiniteness, enablement and obviousness, a question of law that "may contain underlying factual issues," particularly as to whether the claims recite steps that are merely well-understood, routine and conventional for a person of ordinary skill in the art, and thus insufficient to transform an abstract idea into a patentable invention2. By reaffirming that Section 101 is not a pure question of law, this decision could make it more difficult for district courts to grant summary judgment to invalidate claims as patent ineligible, and could further impact the US Patent and Trademark Office’s (USPTO) burden during examination as well.

Steven Berkheimer sued HP Inc. in the Northern District of Illinois for allegedly infringing his patent on digitally processing and archiving files in a digital asset management system. The district court construed the claims, and then granted HP's motions for summary judgment that claims one through seven and claim nine were invalid as patent ineligible under Section 101.3Berkheimer appealed both rulings, but not the underlying claim constructions.

Before turning to the merits of the Section 101 question, the Federal Circuit found that the district court had erred by treating the first claim as representative of the other claims at issue. A claim may be treated as representing the invention only in certain situations, "such as if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative."4 The court also found, "A claim is not representative simply because it is an independent claim," or serves as the primary focus of the patentee's arguments.5

The Federal Circuit held that Berkheimer had not waived his right to present separate patent-eligibility arguments for his dependent and independent claims on appeal, because he had not agreed to make claim one representative of the other claims; his dependent claims recite substantive limitations not found in claim one; and he had advanced meaningful patent-eligibility arguments that were directed only to the subject matter of certain dependent claims.6

Turning to the merits of the Section 101 issue, the Federal Circuit affirmed the district court's finding under the first step of the Alice test that the claims were directed to an abstract idea of using a generic computer for parsing and comparing data (claims one through three and nine) or parsing, comparing and storing data (claims four through seven).7 The Federal Circuit rejected Berkheimer's argument that the "parsing" limitation is sufficient to root the claims in a particular technology by transforming the data structure from source code to object code. "Limiting the invention to a technological environment does not make an abstract concept any less abstract under step one," particularly where there is no evidence "that this transformation improves computer functionality in some way."8

With regard to step two of the Alice test, the Federal Circuit considered whether the limitations of each claim, examined both individually and as an ordered combination, are sufficient to transform the abstract nature of the claim into a patent eligible application.9 The court made clear:

"The question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this one, that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence."10

A Section 101 analysis, then, is a question of law that "may contain underlying factual issues," which "might sometimes overlap with other, fact-intensive inquiries like novelty under § 102."11 This is not always the case, however, as "not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry." Id. at 13. Only in the latter case may summary judgment be appropriate.12

With these principles in mind, the Federal Circuit affirmed summary judgment of patent ineligibility with respect to Berkheimer's claims one through three and nine, but vacated summary judgment for claims four through seven due to material factual disputes. Claims one through three and nine, the court found, did not recite any limitations regarding the patent's allegedly inventive concept to store, analyze and compare data in an unconventional manner to eliminate redundancies and improve efficiency. Rather, those claims recited parsers, functions and generic computer equipment that the inventor himself admitted had already been known for years prior to his patent. These "conventional limitations" thus failed to transform the abstract ideas in claims one through three and nine into a patent-eligible invention.13

In contrast, the Federal Circuit found that claims four through seven contained limitations directed to the arguably unconventional inventive concepts that were disclosed in the specification but allegedly not known or practiced in the prior art. These purportedly inventive concepts involved, for example, archiving reconciled object structures without substantial redundancy (claim four), and selectively editing an object structure linked to other structures to effect a one-to-many change across multiple archived items (claims five through seven). Although HP argued, and the district court agreed, that reducing redundancy and increasing efficiency are considerations in any archival system, the Federal Circuit found that at this stage of the litigation, "there is at least a genuine issue of material fact in light of the specification regarding whether claims 4-7 archive documents in an inventive manner that improves these aspects of the disclosed archival system," or whether they merely perform "well-understood, routine, and conventional activities to a skilled artisan."14 The court thus declined to determine whether claims four through seven are patent-eligible under Section 101, but vacated the district court's summary judgment and remanded for further proceedings.

The Federal Circuit has thus reaffirmed that patent eligibility under Section 101 is a question of law resting on underlying facts. Although summary judgment of ineligibility has been and may continue to be appropriate in some cases, Berkheimer makes clear that summary judgment is not appropriate in all cases, particularly when the underlying material facts regarding the novelty or inventiveness of the claimed invention are in dispute. This decision may make challenging patents under Section 101 more difficult, as alleged infringers will need to present clear and convincing evidence that the technology at issue was well understood, routine and conventional, and thus insufficient to transform an abstract idea into a patent-eligible invention. Furthermore, the patentee may be able to create a factual dispute sufficient to defeat summary judgment by invoking the inventive disclosures in the specification and showing that they were included in the claim limitations.

Likewise, examiners in the USPTO may need to show how certain elements are well known, routine and conventional in order to sustain a Section 101 rejection, rather than merely reciting that principle in a conclusory fashion or relying on a "piece of prior art" without further explanation. Finally, Berkheimer's split decision to affirm summary judgment of invalidity of some claims while vacating summary judgment for other claims in the same patent offers an instructive "controlled experiment" for arguing when claims may or may not be patent ineligible under Section 101, or when summary judgment may or may not be appropriate.

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